Shares of Caleres rose $1.86, or 7.5 percent, to $26.67 on Wednesday after the company indicated its Famous Footwear chain delivered its best back-to-school performance since 2013.

Famous Footwear total sales of $404.9 million were up 3.8 percent. Same-store-sales gained 2.8 percent against a decline of 1.1 percent in the same period a year ago. Comps were positive in each month.

Operating profit at Famous Footwear improved 11.1 percent to $25.1 million. Gross margins dipped slightly to 45.3 percent from 45.5 percent, reflecting in part the year-over-year shipped and back-to-school promotional efforts at its outlets.

Sales were ahead of expectations, including a stronger start to the key back-to-school selling season.

“In total, we saw improvements in sales across all genders, all climate zones and all consumer channels,”’ said Caleres CEO Diane Sullivan on a conference call with analysts. “We also saw an improvement in traffic, which was up 3.5 percent, and both comp sales and traffic, are benefitting from our consumer targeting efforts.”

In terms of product trends at Famous, continued growth was seen in overall athletic sales, with men’s and women’s up mid-single digit, while kid’s athletic sales were up high-single digits.

Lifestyle athletics also continued to trend higher, and delivered sales improvements of 20 percent. For seasonal products, women’s footbed and sports sandal styles “performed especially well” in the second quarter. In total, women’s sandals sales were up low-single digits and delivered significant margin improvement.

At Famous, inventory at the close of the quarter was down 1.4 percent per store on a dollar basis, and down 1.3 percent per store on a pair basis.

Overall, Sullivan believes Famous is benefitting from efforts around acquiring, retaining and growing its share of wallet with targeted high value customers.

“This work has provided significant consumer insights, and as a result, we have seen our best start to back-to-school since 2013,” said Sullivan.

She added, “Season to-date comp sales are similar to our second quarter as we benefited from several key efforts related to these consumer insights. For example, to drive consumer interest earlier in the season, we introduced trend stores in advance of the peak selling weeks, and highlighted color trends specifically gold, black and burgundy. We also rolled out new digital brand landing pages for our key athletic brands that we carry.”

Better targeting media and marketing spend also helped Famous become more efficient and react more rapidly. For example, in May, Famous completed a media test targeting prospective consumers and based on the program’s success, expanded it to the rest of the chain for BTS.

“As a result of these efforts, we’re building on relationships and engaging with new consumers by speaking directly to them. And these purposeful efforts are paying-off and driving new visitors and shoppers to Famous Footwear,” said Sullivan. “While it’s still very early, we are working hard to own that relationship with our consumer and we’re seeing initial results and improved sales and traffic trends, and an increased rewards member sign-up in addition to a number of other areas.”

In its other segment, Brand Portfolio’s sales ran up 26.8 percent to $104.2 million. Operating earnings declined 8.9 percent to $15.9 million due to costs related to the acquisition and integration of Allen Edmonds and reorganization of it men’s brands. Adjusted operating income rose 5.7 percent to $18.5 million.

The company’s Contemporary Fashion brands include Sam Edelman, Allen Edmonds, Franco Sarto, Vince, Via Spiga, George Brown Bilt, Diane von Furstenberg, Fergie Footwear and Carlos Santana. Naturalizer, Dr. Scholl’s Shoes, LifeStride, Bzees and Ryka represent its Healthy Living brands.

The revenue gain for the segment was driven by the acquisition of Allen Edmonds. Organic sales were flat, slightly below plan, as efforts to shift sales away from lower margin channels were only partly offset by growth in online channels. The strongest gains were seen by Sam Edelman and Vince, both women’s and men’s, while Naturalizer showed some recovery, with North American sales up year-over-year.

Companywide, earnings in the quarter slumped 10.9 percent $17.6 million, or 41 cents a share. Adjusted for costs related to mergers and acquisitions, earnings rose 10.3 percent to $20.1 million, or 48 cents, and topped Wall Street’s consensus target of 45 cents.

Net sales improved 8.7 percent to $677 million.

Gross profit of $287.5 million – including $1.9 million of expected fair value inventory adjustment amortization related to the Allen Edmonds acquisition – was up 10.8 percent and gross margin of 42.5 percent was up 80 basis points. SG&A expense of $253.5 million was up 11.5 percent, including Allen Edmonds.

Caleres maintained its guidance for the year. Consolidated net sales are expected to range $2.7 billion and $2.8 billion. Famous Footwear same-store sales are projected to be up low single digits while Brand Portfolio sales are set to rise high teens. Adjusted EPS is expected between $2.10 to $2.20.

Photo courtesy Famous Footwear